Arguments about a hard link between gold and America’s currency always wind up being contentious — and frequently see both sides getting wrapped up in their own circular logic. It also doesn’t help that gold is iconic and universal in its representation of wealth; it also is physical and can be touched, unlike so much in the world of finance. Thus, debates tend to be philosophical as much as economic in nature.

So at risk of further angering folks on every side of the issue, I’d like to try to speak logically about the gold standard and why it’s a bad idea. I’ll start by trying to outline the case for a gold standard and against the current dollar as I understand it in seven key points:

“Real” Money: Gold is real and has real worth, unlike fiat money such as the dollar that holds no intrinsic value. There is no guarantee your dollars won’t be worth nothing tomorrow.

Economic Stability: The value of gold cannot be manipulated by bureaucrats for political ends. At best, Federal Reserve moves have had unintended negative consequences by messing with the dollar — and at worst, central bankers have willfully enriched some and caused hardship for others.

Price Stability: A side function of an unstable dollar is the large swing in consumer prices, particularly commodities like oil that are tied to the greenback’s value. Since gold prohibits this kind of manipulation, prices would be more stable.

Bank Risk Tamed: Banks still would exist, to be sure. But the practice of “fractional reserve” banking would cease to be so dangerous since currency deposits would be convertible to physical gold on demand — thus increasing the need for banks to keep substantial assets on hand.

Deficits Tamed: As with bank leverage, a fiat currency like a dollar allows for (and some contend encourages) bigger government deficits since there’s no need to back up the debt with anything real. Gold stops this.

No Link to Dummies in D.C.: Similarly, the dollar also is tied to the fate of our government. As we saw in Europe, political instability can cause the value of money to drop precipitously. But gold is always gold — regardless of how poorly run Congress is.

Not a Barter System: A gold standard doesn’t mean only trading physical gold coins. E-commerce will exist — as will paper currency, so long as dollars could be converted to the commensurate amount of gold on demand.

I believe that’s the case for gold, as succinctly as I can make it. But now allow me to tackle these points one by one to show the flaws in their logic — and why the gold standard is at best an equally bad idea, and at worst damaging to the economic stability of the U.S.:

On ‘Real’ Money — Gold Can Lose Value, Too

True, gold will always be worth something. Paper money can become worthless based on poor policies — as we most recently saw in the case of Zimbabwe, where hyperinflation caused the nation to abandon its currency.

But while an ounce of gold is worth “more” than many things — like, say, a pound of beef or a yard of fabric — exactly how much more is up for debate. Gold prices are notoriously volatile, and are not immune to declines. Take a look at this chart from InflationData.com, showing the inflation-adjusted price of gold and how it has whipsawed:

Just as the value of a dollar fluctuates, the value of gold fluctuates, too — sometimes to the downside. It’s not fair to say that gold only continues to hold or even grow its value over time, because while nominal prices have gone up, they’ve also gone up for coffee and corn in the past few decades. Adjusting for inflation, we are still below the 1980s peak of the precious metal. Gold clearly can lose value.

It admittedly has been a good run for gold since 2000, and I won’t deny that. But let’s talk economics and not returns vs. the S&P 500 — because that only proves the case that gold is subject to investment “speculators” and thus big swings in price.

Now, detractors point out that the volatility coincides perfectly with Nixon’s 1971 move to end the practice of redeeming dollars for physical gold. Fair — but the fact that gold values were cut in half from the beginning of World War II to the mid-1950s proves this kind of volatility predates that policy.

On Economic Stability — ‘Inflexibility’ a Better Word

It’s a fair point that the Federal Reserve is imperfect and has sometimes caused more harm than good in its efforts to manage the U.S. economy. But it is impossible to argue that the Fed is wholly evil and has never done anything right.

In fact, the inciting incident for the third incarnation of America’s central banking system was the Banker’s Panic of 1907. Under a gold standard and without the Federal Reserve, stocks flopped 50% and a lack of liquidity caused a run on banks. It took folks like J.P. Morgan acting like a central banker to shore up the financial system.

It’s also worth noting that, thanks to an elastic currency, a federal reserve system has largely succeeded in eliminating deflation — an ugly downward spiral of wages and prices — since the Great Depression, despite the relatively common occurrence of deflation before the Fed and after the Civil War.

So while very different in nature, the bottom line is that neither “soft money” with the Fed or “hard money” via a gold standard wholly prevent economic crashes — and both have benefits in different situations. Neither is perfect.

Of course, an unavoidable fact is that gold has no human hand behind it. That drives many to prefer the rigid option of gold to prevent damage caused by corruption or stupidity. And considering all parties should admit that the Fed and Alan Greenspan’s easy-money policies are at least partially to blame for the 2008 meltdown, the point hits close to home.

But now we have strayed into the philosophical, about whether you trust policymakers to do what’s “best.” And that’s far too weighty a discussion to have here, involving bigger questions about the size and scope of American government.

Let’s just say that on a crisis-prevention basis, gold also has its flaws, and leave it there. Leaving the free market to its own devices free of monetary policy doesn’t always result in boom times.